The Ten Year Track Record of the North American Free Trade Agreement

January 1, 2004 marked the tenth anniversary of the North American Free Trade Agreement’s implementation. NAFTA promoters — including many of the world’s largest corporations — promised it would create hundreds of thousands of new high-wage U.S. jobs, raise living standards in the U.S., Mexico and Canada, improve environmental conditions and transform Mexico from a poor developing country into a booming new market for U.S. exports. NAFTA opponents — including labor, environmental, consumer and religious groups — argued that NAFTA would launch a race-to-the-bottom in wages, destroy hundreds of thousands of good U.S. jobs, undermine democratic control of domestic policy-making and threaten health, environmental and food safety standards.

Why such divergent views? NAFTA was a radical experiment — never before had a merger of three nations with such different levels of development been attempted. Plus, until NAFTA, “trade” agreements only dealt with cutting tariffs and lifting quotas setting terms of trade in goods between countries. But NAFTA contained 900 pages of one-size-fits-all rules to which each nation was required to conform all of its domesticlaws — regardless of whether voters and their democratically-elected representatives had previously rejected the very same policies in Congress, state legislatures or city councils. NAFTA required limits on the safety and inspection of meat sold in grocery stores; new patent rules that raised medicine prices; constraints on local government’s ability to zone against sprawl or toxic industries; and elimination of preferences for spending your tax dollars on U.S.-made products or locally-grown food. Calling NAFTA a “trade” agreement is misleading, NAFTA is really an investment agreement. Its core provisions grant foreign investors a remarkable set of new rights and privileges that promote relocation abroad of factories and jobs and the privatization and deregulation of essential services, such as water, energy and health care.

Remarkably, many of NAFTA’s most passionate boosters in Congress and among economists never read the agreement. They made their pie-in-the-sky promises of NAFTA benefits based on trade theory and ideological prejudice for anything with the term “free trade” attached to it. Now, ten years later, the time for conjecture and promises is over: the data are in and they clearly show the damage NAFTA has wrought for millions of people in the U.S., Mexico and Canada. Thankfully, the failed NAFTA model — a watered down version of which is also contained in the World Trade Organization (WTO) — is merely one among many options. Throughout the world, people suffering with the consequences of this disastrous experiment are organizing to demand the better world we know is possible. But, we face a race against time. The same interests who got us into NAFTA are now pushing to expand it and lock in 31 more countries in Latin American and the Caribbean through the proposed Free Trade Area of the Americas (FTAA) and five Central American countries through a Central American Free Trade Agreement (CAFTA).